Indian
banking today is at a tipping point. Banks are burdened with non-performing
assets, incurring significant losses due to provisioning and unable to
sustain credit growth, and therefore changes are both necessary and inevitable.
There are possible strategies with very different implications: many leading
banks could be restructured with state support and encouraged to regain
the status they had as major instruments of development policy in the
two decades after nationalization; or they could be allowed to weaken
further, only to be swallowed up by large domestic and private players
at bargain prices. The second option would take the sector back to the
pre-1969 years when banks were instruments of private aggrandizement rather
than of social advance, so it is not even the beginning of an alternative.
This report suggests that the first option is the necessary and desirable
strategy, and further that it needs to be accompanied by other measures
that would correct the damage wrought by misguided policies over the last
two and a half decades, as well as place Indian banks on a footing that
enable them to play a leading role in a larger transformation of both
economic policy and the nation's development path.

About
the Authors

C.
P. Chandrasekhar, is Professor at the Centre for Economic Studies and
Planning,School of Social Sciences, Jawaharlal Nehru University, New Delhi.
Besides being engaged in teaching and research for more than three decades
at JNU, he has served as Visiting Senior Lecturer, School of Oriental
and African Studies, University of London and Executive Editor of Deccan
Herald Group of Publications in Bangalore. He was a member of the Independent
Commission on Banking and Financial Policies constituted by AIBOC in 2004
and released in 2006. He has published widely in academic journals and
his most recent book titled "Karl Marx's Capital and the Present"
was published in 2017. He has also co-authored many books, including,
“India in an Era of Liberalization”; “Crisis as Conquest: Learning from
East Asia”; “The Market that failed: A decade of Neo-Liberal economic
Reforms in India”; and “Promoting ICT for Human Development in Asia: India”.
He is a regular columnist for Frontline and Business Line brought out
by The Hindu group of newspapers and a contributor to the H.T. Parekh
Finance Column in the Economic and Political Weekly.

Jayati
Ghosh is Professor of Economics at the Centre for Economic Studies and
Planning, School of Social Sciences, Jawaharlal Nehru University, New
Delhi. She has authored and edited a dozen books and more than 180 scholarly
articles. Recent books include Demonetisation Decoded: A critique of India’s
monetary experiment (with CP Chandrasekhar and Prabhat Patnaik, Routledge
2017), the Elgar Handbook of Alternative Theories of Economic Development
(co-edited with Erik Reinert and Rainer Kattel, Edward Elgar 2016) and
the edited volume India and the International Economy, (Oxford University
Press 2015). Her research output has been recognised through several prizes
in India and abroad. She has advised several governments and consulted
by many National and International organisations. She is a regular columnist
for Frontline and Businessline, and also writes occasionally for the Triple
Crisis Blog, The Guardian newspaper and The Indian Express and other outlets.
She has been closely involved in working with progressive organisations
and social movements.

CONTENT

ForewordIntroduction
From Independence to neo-liberal reform: The evolution of Indian banking
Changes in banking policy and bank performance since the 1990s
Bank credit and growth of economic activity
Dealing with NPAs
The failure of financial inclusion
Demonetisation and the role of the Reserve Bank of India
Defining the Challenge
Reforming personnel management practices
The way forwardReferences